The US dollar is under broad pressure as the narrative shifts away from inflation and towards the rising likelihood of a recession.
That's after the S&P Global composite PMI for the US fell to 51.2 from 53.8. It had been expected to remain relatively stable.
The comments in the report were troubling as the outlook from business executives deteriorated rapidly. The strong US dollar might also be having a negative effect on business as export orders plunged.
Markit participants are showing much less worry about inflation and instead looking for safe havens from poor growth. US 2-year yields are down 17 basis points today to 2.89%. That's down sharply from the high of 3.45% last week.
The dollar is particularly sensitive to short-term rates and it's weakening across the board. USD/JPY has now extended the decline to 188 pips and 134.38. The pair is now lower on the week.
The broader market likes the fall in yields as US equities climb to the highs of the day. Fed funds are now pricing a terminal top in the 3.25-3.50% range, down from +4% last week.